Considering Partnership

Question: I am in my third year as a salaried employee in a three-physician practice and am looking into partnership. However, the practice situation is a little complex.

According to the business manager, the financial outlook for the practice is healthy, but I wouldn’t know since I am only employed and am not privy to the information. The accounting seems a little confused.

I am currently paid $150,000, and my partner keeps telling me it’s a very competitive salary. I don’t know whether it’s true. If I am to negotiate my situation, then who is the best person to represent and advocate for me? A mediator or a lawyer?

Answer: You should definitely encourage the practice to clean up its accounting and show you the data as soon as possible. You have now invested three years in this practice with the goal of becoming a partner, but you don’t have any idea of what sort of business you’re proposing to join. If the other physicians potentially want you on board as partner, they should start training you now on being a part of the business side as well, and it’s only fair to tell you what is going on. The assurances of the manager are not sufficient.

It would no doubt be worthwhile to have a consultant clean up the systems and reporting and educate everyone on what to review monthly. The accounting really should be transparent.

Becoming a partner is a business decision. You are buying into a business, not playing a game of flattered egos and academic-style approval seeking. You should also lay down the law contractually about what your job is - hours, doing paperwork for colleagues, call schedule, productivity expectations, etc. - so you don’t get railroaded later and so they know what to insist on.

As for the second part of your question, go ahead and ask salaried physicians in other practices like yours what they make. Why not? They want to know what you make, too. And this is not price-fixing.

According to the Medical Group Management Association, physicians in your specialty make a median compensation of $187,138.

Speaking very broadly, lawyers are best at reading contracts. Have one review the terms of any contract or partnership agreement. You might be able to find an attorney who can both review documents and negotiate on your behalf. If not, you might consider retaining two lawyers: one for document review, the other for negotiating.

Also, arm yourself. You need to know good financial performance when you see it, how to judge salaries and overhead, how to read reports from the practice’s management system, what reports to ask for, what a typical buy-in looks like, how your productivity compares with that of your potential partners, and so on.